As the United States faces a potential debt default in June, an intriguing solution has emerged: creating a single $1 trillion platinum coin. This unconventional method takes advantage of a legal loophole allowing the Treasury Department to mint platinum coins of any value. By handing over such a coin to the U.S. central bank, the Treasury could theoretically generate enough funds to resolve its debts. Although the proposal might sound outlandish, it’s gained some popularity as a feasible escape route from the looming debt crisis.
Modern Monetary Theory (MMT) proponents are excited to see the trillion-dollar coin concept grabbing headlines again. Treasury Secretary Janet Yellen recently warned that a U.S. debt default could potentially result in an “economic and financial catastrophe.” As concerns over the debt ceiling heighten, discussion surrounding the Treasury creating a trillion-dollar platinum coin has resurfaced.
Rohan Grey, a professor at Willamette University College of Law and MMT advocate, claims the idea is viable. He argues that other solutions’ ineffectiveness has left the trillion-dollar coin as the only available option. Back in 2020, Grey worked with Michigan Democrat Rashida Tlaib to propose minting two trillion-dollar coins for basic income purposes. This “break-the-glass thinking” was praised by renowned journalist Joe Weisenthal.
Even former President Barack Obama considered the coin proposal in a 2017 interview. In October 2021, lawmakers also discussed minting a $1 trillion platinum coin to boost the Treasury’s funds. However, according to Insider’s Juliana Kaplan, the trillion-dollar coin plan is “unlikely to fly,” as Biden aides explore other legal alternatives.
The idea has sparked a mixed reaction on social media, with some ridiculing it while others express confusion. Wall Street Silver’s Twitter account commented on the unusual economic strategy, asking why reasonable budget cuts aren’t being discussed to address the situation. Nobel laureate Paul Krugman asserts that this approach would not amount to MMT implementation, insisting it is just a bookkeeping trick rather than “printing money to cover the deficit.” He asserts the Fed would likely counterbalance any monetary impact by offloading some of its vast portfolio of U.S. debt.
Ultimately, opinions on the trillion-dollar platinum coin proposal are divided. Some view it as a viable solution to the United States’ impending debt default, while others see it merely as a financial sleight of hand. Whatever the case, it’s undeniable that this idea has ignited a compelling conversation on how the U.S. can navigate the looming economic crisis.